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EcommerceBytes-NewsFlash, Number 3022 - March 15, 2013 - ISSN 1539-5065    2 of 4

Google Forced to Defend Ad Program in Response to eBay Report

By Ina Steiner
EcommerceBytes.com
March 15, 2013




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eBay's claims that paid search on Google, Bing and Yahoo was generally ineffective based on tests it had conducted created controversy this week. Google was forced to defend its ad program, but eBay's former Vice President of Advertising and Internet Marketing who later worked at Google told EcommerceBytes the findings were consistent with what he observed while at eBay.

Meanwhile, most retail advertisers like Joel Lederhause, President and CEO of DiscountRamps.com, didn't panic, and many simply took eBay's report as a reminder of the importance of testing their ad campaigns.

Lederhause, whose company did $21 million in sales in 2011 according to Internet Retailer Top 500 Guide, said eBay's research findings could change his firm's behavior, but only when bidding on his own brand. eBay's report, detailed in Tuesday's newsletter, found that purchasing keywords for its own brand name was ineffective because, absent paid search links, consumers simply click on organic search links. "This implies that brand keyword advertising expenses have neither persuasive nor informative value to well known corporations, and arguably, for other companies as well," according to the report.

Lederhause said he currently bids on his company name in several variations, "Discount Ramps" and "DiscountRamps.com." While he may try turning that off after reading the article, he said the real advantage with PPC (Pay Per Click) is the control it gives him.

"Unless we rank #1 in Google organic for the exact product category page I want the searcher to land on," he said, "I can use Adwords as a tool to give us the ability to serve up the exact page we want a search term to land on as well as the ability to write the content we feel is important about the product segment and will entice the searcher to come and check out our offering."

SEM Experts Disagree with eBay Conclusions
eBay's report also concluded that the effectiveness of SEM for non-branded keywords was small for a large and well-known brand like eBay. But Timothy Seward, CEO of ROI Revolution, disagrees with that conclusion. His online marketing agency manages in excess of $100 million in ad spend on Bing and Google for 160 retailers. "For Main Street retailers, it's business as usual."

While a few of his clients forwarded the article, "no one is running for the exits. Google is not going to go out of business," he said

Seward said eBay based its conclusions on situations where there were no paid search links to compete with organic search links. "If your brand term is not absent paid search listings, we've almost always found it's a net win for the retailer" to advertise. "In on-again off-again testing, it almost always brings incremental revenue." And even retailers advertising with Google Shopping Product Listing Ads should continue to advertise with Google AdWords, he said. (Edited to read "brand term" rather than "term.")

Referring to eBay's conclusion that the effectiveness of SEM for non-branded keywords is small for a large and well-known brand like eBay, Seward said, "For the 99.5% of all retailers who don't have a name like eBay, you wouldn't use that to conclude how you should advertise for non-branded keywords."

Most retailers think paid search is about the bid. But the other half of the story is how relevant the text in the ad is to what you're searching on, he said. Google rewards for relevancy because they make more money when shoppers click on relevant ads. There's a lot to say about what makes a paid search ad relevant, but it should have a call to action or present a unique benefit, according to Seward.

The relevancy and quality of eBay's ads became the focal point of arguments waged by search marketing bloggers defending their turf. "Dear eBay, Your Ads Don't Work Because They Suck," was the title of a blog post written by Larry Kim, founder and CTO of Wordstream, an Internet marketing software company.

"eBay is probably the world's biggest abuser of an ad writing tactic in AdWords known as Dynamic Keyword Insertion or DKI," he wrote on the post. "As its name suggests, DKI dynamically inserts the user's query into the headline of your ad."

Kim told EcommerceBytes on Thursday that Google ads cost more if they have lower relevancy and noted that even if eBay improved its advertising, Google's scoring mechanism is based on your history. "It still lives with you," he said.

He also said that it's highly unusual for a company to share information about what works in paid search and what doesn't. "Search is very competitive - it's an auction," Kim said. Most companies in search marketing would keep proprietary data containing valuable learnings to themselves, and he said it's a legitimate question to ask eBay's motive in releasing the study.

Former eBay VP Speaks Out
Matt Ackley, Vice President Merchant Services at Zerve, worked at eBay for 8 years and for five of those years he headed its Internet Marketing and Advertising group. Asked about the eBay report released last week he said, "Given the amount of money we spent in online marketing and the ability to "measure" it, this was always the top topic of conversation across all online marketing channels," he told EcommerceBytes. "We tested all the time."

He said in 2007, eBay "went dark on Google" and saw similar results as those described in the recent eBay study. "One, we saw that search was very good at acquiring new users (as this report seems to state), and two, we also saw that the incrementality of certain keywords were not as great as we thought and it lead to an adjustment of our SEM attribution window (from 24 hours to 1 hour post click attribution)."

"Taken as a whole and given the measurement techniques at the time, we found that search was incremental," Ackley continued. "Those are just two out of thousands of learnings we incorporated over the years. We did this kind of stuff all the time and as you learn - for instance certain keywords perform better at acquiring new users so you can adjust your spend to those words if that is your goal, etc.- you adapt your strategies. That is the beauty of online marketing - you can test and learn."

eBay Sellers: Can't We All Just Get Along?
The 2007 incident Ackley referred to was known as the Boston Tea Party when Google encouraged eBay sellers to protest the marketplace's ban on Google Checkout as a payment method and eBay retaliated by suspending its U.S. AdWords campaign. It seems the two companies are not getting along any better these days.

Back in 2007, eBay sellers felt like they were the victims and expressed grave concern over the impact of eBay's suspension of advertising on traffic to their eBay listings.

In a discussion about the recent paid-search report on an eBay discussion board this week, a seller wrote, "The money you pay to eBay in fees which part of is earmarked for advertising they are putting in their pocket instead of advertising your wares. eBay claims there is no value gained by spending that money on advertising so they don't spent it instead just pocket it. Then they turn around and sell advertising space to your competitors that appears in your listings. It doesn't work if eBay has to spend money, but does work if they are selling it."

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

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